7 reasons why personal loans have become popular

There has been a tremendous growth in the Indian economy in the last couple of years. The benefits of this growth have extended to the personal finance sector as well. The way an individual can apply for an instant personal loan has transformed by leaps and bounds.

Here are seven reaosn why personal loans are becoming popular over the years.

1. Lower and attractive interest rates

The interest rate is one of the first things that customers check while taking small loans. Currently, both banking and non-banking financial corporations are offering lower interest rates for personal loans.

In fact, P2P lenders offer competitive interest rates that are often lower than most public and private sector banks.

You can compare various interest rates online and choose the one that suits you the best. Typically, interest rates for personal loans start at 10.85 per cent.

2. Different borrowers are being catered to

Banks are now offering several personal loan options based on an individual’s income and employment status. Different categories of borrowers include pensioners as well.

3. Easy approvals, minimum documentation

The documentation required for consumer durable loans are also going down. The age of digital lending is leading to paperless loan approvals, right from e-KYC to disbursal.

In fact, many banks are offering personal loans through ATMs to the eligible individuals.

This is making the process seamless and hassle-free, which is encouraging more and more people to apply for personal loans.

Thanks to online loan applications, personal loan sales are steadily increasing.

4. Simplified application process

Earlier, the banks and non-banking financial institutions used to check all the loan applications critically. In fact, many lenders rejected many applications or required additional documents to prove repayment capacity.

It’s a different story now — lenders are working towards attracting customers by simplifying the application process. They are helping the customers improve their eligibility criteria for a personal loan and complete the loan application successfully.

5. Ease of business funding and increasing market

More and more people are taking the road of entrepreneurship. While many choose to seek an investor to fund their startups, it does not always result in a positive outcome. In such cases, a personal loan for a businessman is the next best step. You can apply for a business loan easily and take your company ahead.

Additionally, the market for personal loans has widened tremendously. Earlier, only people with a strong financial base could avail personal loans. Now, even the smaller financial institutions can afford them, thus increasing the overall customer base.

6. Digitised personal loan applications

Thanks to online loan applications, personal loan sales are steadily increasing. Unlike before, you no longer have to go through a time-consuming and tedious process to get your loan approved. You can even apply for personal and business loans right from your home. Forget about making multiple rounds to the bank just to get the loan approved!

7. Flexible repayment options

The borrowers can repay their personal loans through multiple payment modes that include Electronic Clearing Service (ECS), Standing Instruction (SI) and net banking to name a few. This ensures that you don’t waste time in long queues to repay a loan as it was originally done.

Based on different enabling factors coupled with a growing market size, the need for personal loans would continue to grow in the coming years. Moreover, personal loans may soon become the financial debt product that will be able to cater to the growing needs of the customers. All these factors point to an exciting future of instant personal loans.